This is the second installment looking at the New York Times in depth investigation into the Caracol industrial park. For part one, click here.

Jobs at What Cost?

Sontag reports that while concerns over Sae-A’s labor practices were consistently brought to the attention of officials, the project continued to go forward without a comprehensive review:

Before the Haiti deal was sealed, the A.F.L.-C.I.O. urged American and international officials to reconsider, given what it described in a detailed memo as Sae-A’s egregious antiunion repression, including “acts of violence and intimidation” in Guatemala, where Homero Fuentes, who monitors factories for American retailers, calls Sae-A “one of the major labor violators.”

The five-page memo “accused Sae-A of using bribes, death threats and imprisonment to prevent and break up unions.” Sontag describes the allegations against Sae-A in some detail, and notes that while “Gail W. Strickler… the assistant United States trade representative for textiles, says she considered Sae-A ‘an exemplary corporate citizen,’” meanwhile “Scott Nova, executive director of the Workers Rights Consortium, calls the company ‘a big player in a dirty industry with a track record that suggests a degree of ruthlessness even worse than the norm.’”

Of course, labor rights violations in the garment sector in Haiti are nothing new. In fact, on the same day that U.S., Haitian and development bank officials inaugurated the Caracol park, an investigation by Better Work Haiti found "evidence of violations of freedom of association" at other Haitian textile factories. The most recent Better Work Haiti report, which “uncovered a higher number of violations in the areas of core labour standards than what [was] observed in the previous assessments”, is available here. 11 of 20 factories were found to be non-compliant in at least one of the core labor standards.

“American officials said Sae-A would be closely monitored in Haiti because of trade legislation requiring stringent scrutiny through an American-financed inspection program.” As part of the legislation providing duty free access to the U.S. market, the U.S., together with the Better Work Haiti program, provides oversight as well as training to employers, employees and Haitian government officials on labor rights issues. But as Yannick Etienne of the Haitian workers’ rights group Batay Ouvriye tells Sontag, ‘“it remains to be seen” whether the inspection program will have “any teeth.”’

Every two years, the U.S. must identify which producers are in compliance with core labor standards and Haitian labor law. The most recent report, which was published in the last month, notes that, “While this is USTR’s fourth report, this is the first reporting period that [non-compliant] producers have been identified.” Yet, giving credence to Etienne’s concerns, this does not mean that the three producers identified as non-compliant on core labor standards will miss out on duty-free access to the U.S. market. As long as the producer shows an effort to improve and work with the U.S. to correct the problems, they will face no sanctions.

One resident of Caracol, who went to Nicaragua to participate in a Sae-A apprenticeship came back so disillusioned he told the New York Times that as soon as he found other work, he would quit his job with Sae-A:

“The way the Koreans treat the Nicaraguan workers is awful,” Mr. Joseph said. “They just treat them like nothing. Just: ‘Do your job. If you don’t do it, I’ll call somebody else to do it.’ ”

Sae-A Chasing Lower Costs

Sae-A made it clear to their employees in Guatemala that if their costs went up, they would pack up and move elsewhere:

According to the formal minutes of a labor-management meeting, a Sae-A executive accused union leaders of saddling the company with expenses that would force the factory’s closing. “It should be made clear,” the executive said, “that the members of the board of directors would simply go to work in another country and the real losers would be the workers.”

Following continued confrontation with the union, the factory closed in 2011, yet as Sontag points out much of their production had already shifted to Nicaragua, another beneficiary of the Central American Free Trade Agreement (CAFTA). And, as Mr Garwood, the Sae-A advisor pointed out, once trade preferences for Nicaragua expire in 2014, “a lot of product orders now going to factories in Nicaragua can go through the Haiti operation.” Which, as independent journalist Tate Watkins points out, begs the question:

With so much of the project’s costs being borne by USAID and IDB and dependent upon favorable tax and tariff deals in both Haiti and the U.S., you can’t help but wonder whether the company’s product orders will still be going “through the Haiti operation” in 10 years.

Of course, while labor rights, environmental degradation and social concerns may have been side-tracked in the race to push forward the flagship reconstruction project, the program’s backers were aware of the risks. IDB manager José Agustín Aguerre tells Sontag:

“But to be honest, in a country like Haiti, maquiladoras are a good opportunity, a quick employment generator. Yes, it’s low-paying, yes, it’s unstable, yes, maybe tomorrow there will a better opportunity for firms elsewhere and they will just leave. But everyone thought this was a risk worth taking.”

But Etienne, Sontag writes, worries that “Caracol will undermine the nearby Codevi industrial park, the only unionized garment operation in the country.